Last month, the Center for Health Value Innovation released its 2010 Value-Based Design Report - a study of more than 170 companies, representing more than 4 million covered lives, produced in partnership with Buck Consultants - which takes the national temperature on how value-based benefits designs are progressing in U.S. workplaces.
So, what's the temperature? Definitely hot - but in the good, cozy by the fire kind of way. And who couldn't use a bit of that after this freezing, snowy winter?
EBN Editor-in-Chief Kelley M. Butler spoke exclusively to CHVI President Cyndy Nayer shortly after the report's release to get her thoughts on the overall advancement of value-based design and insights employers should take from the research.
"First, value-based benefits design is even more pervasive than we imagined it was. Second, it's not just the largest of the largest that are doing value-based design - we thought only the large companies are doing it, when, in fact, they're not," Nayer said. "In fact, most of the growth has been [among] companies that have between 100 and 5,000 employees, which was stunning.
"What that means is that you also don't have to wait for a self-insured plan," she continued. "Now yes, it's much easier with a self-insured plan, but you can do it in a fully insured plan ... by creating stand-alone incentives, outside the insurance plan, to guide people to the appropriate care delivery and the appropriate chronic care management sources."
In addition to value-based design penetration, "we also tested the concept of outcomes-based contracting, and about 11% of respondents said that they are doing it," Nayer said.
"We asked them with what kinds of providers? And the answers ranged from condition management companies, pharmacy benefit managers, primary care physicians, all the way to nurse practitioners and other communication services providers."
What does all this boil down to? According to Nayer, "I think that what we can say is value-based design is uniquely embedded into the fabric now."
Nayer went on to drill down on several specific trends and data points addressed in the report.
EBN: Obviously, implementing value-based design is easier to do with self-funded plans. But could you define some of the barriers for fully insured plans and how those might be overcome?
Nayer: There are a couple of problems when you're fully insured: It's difficult to get your own data, and there aren't a lot of products.
That said, it's hard to design [VBD] specific to your company unless you have a workaround, and the workaround is this: creating an incentive-based design outside of insurance for getting your biometric screen - at the bare minimum - and doing a health risk appraisal if it's affordable.
If you can't do a health risk appraisal, biometric screening is imperative because, at that moment, you now understand the risk in your population.
That means you can deploy incentives and disincentives across the population by gender, age and salary distribution, and you can create incentives that will get segments of your population to manage their health better.
EBN: Speaking of incentives, the report notes the most popular ways to promote appropriate utilization are incentives and disincentives. Not very surprising, but what do you think is most effective: giving people money to do the right thing, taking away money/charging them more when they do the wrong thing, or a combination of both?
Nayer: Behavioral economics says that people are more fearful of loss than gain, so that would argue for disincentives. But it really depends on the culture of the company.
There are some companies where giving a disincentive is just not in their vernacular, but there are others that just can't see giving a reward for doing what you're supposed to be doing.
I think it's a combination of both, but it's also how you package it. You can say, 'If you don't do this, we're going to charge you more,' but the exact same message can be given as, 'If you do this, you'll pay a lower premium.' It sounds like an incentive. A lot of it is in the packaging.
One caveat here: The more we give money, without reinforcing the behavior but only reinforcing the money, the more money we'll have to give.
To use a metaphor of training a puppy, you have to stop giving her cookies after a while when the puppy knows what she's supposed to do. If you want her to continue to do positive behaviors, praise is often a lot of what matters.
EBN: A couple of the findings on communication raised red flags for me. Quarterly benefits communication was the most popular among employers at 36%. That doesn't seem like enough to me, but what do you think? Is it quality not quantity that matters, or should people be communicating more often?
Nayer: I am a huge proponent of communicating more often, especially in the first 90 days. You want to broadly communicate every 30 days in the first quarter of the launch so that people begin to understand it and talk about it.
Think about the enormity of announcing a new benefits plan, especially with something [as large-scale as VBD], employees are like, "What is this? How does this work? Oh well, I have to get back to work."
Then throughout the rest of the year, I think it's a more targeted approach where people who need more stabilization or adherence get more communication, but for those who are doing just fine, a quarterly checkup will do.
EBN: And most employers are communicating by e-mail. Does that get the job done? I know some people who glaze over company e-mails and even just delete after barely reading the subject line.
Nayer: I'd like to see some of the initial messages go out in a variety of ways - I'll read e-mails, my husband prefers print and my daughter won't read anything unless it's in a text message.
But then, I think there needs to be a transfer of accountability to the consumer, where consumers tell plan sponsors how they prefer to be communicated with. If you tell us how you'd like to receive communications, it's not like we're bugging you - we're giving you the information the way you want to receive it.
EBN: That relates to the next thing I wanted to ask about: Most employers (57%) don't survey their employees. So, what other opportunities are they missing out on by not doing so?
Nayer: They're still not paying attention to engagement and [when and how to best engage employees]. For example, if you ask a woman what areas are important to her when it comes to health improvement, the first thing she'll say is her weight.
And the next thing she'll say is she's worried about getting breast cancer. So, if you want a woman to be focused on her health, the best time to talk to her is in October because it's Breast Cancer Awareness Month and women tend to think about that - even though the reality is women are more likely to die of cardiovascular disease and its complications.
So, you might want to offer messages during October about breast cancer and women's health, and connect that the risk factors that raise the likelihood of breast cancer also raise the likelihood of cardiovascular disease, and begin to engage in that conversation.
For younger workers, a lot of them are smoking. Obviously it's hard to get people to stop smoking, but I love the commercials showing shriveled-looking 30-year-olds, because, of course, that's not what they want to look like. Appeal to their vanity to engage them.
But at the end of the day, asking employees what [issues surrounding their health] are important to them and asking them how they'd like to get engaged in managing them is the ultimate accountability.
I'm surprised to see this number of folks say they don't survey employees. Asking people what they want is a much better way to go, and it won't waste their dollar.
EBN: Switching gears now to benchmarking. In terms of benchmarking, 90% of employers use benchmarking information to chart their future benefits course. There are 8 skillion benchmarking studies, so what resources should employers be using to make sure they're getting apples-to-apples comparisons?
Nayer: You're right; we haven't held people to accountability in actuarial design - at least not yet - but we've gotten more rigorous, as has everyone else.
First, we had to get value-based design on everyone's screen, and that took a few years; then we had to get a compendium of companies who have succeeded in it. Now, everyone is starting to build the evidence base with comparisons that do matter.
Many of the leading organizations in this space are working to come up with a compendium of metrics that we can agree to, and that will be really important.
But while they're looking for benchmarks, employers are getting a great deal of information from their consultants. So, it's going to be critical that consultants use the definition [of value-based design] the same way those of us in the lead here do.
Sometimes people use the value or value-based to mean cheaper, and that's not the same thing at all.
I think if we could all go back about 10 years, we might have taken value-based and called it evidence-based, or incentive-based, or behavior-based - but we didn't know that then.
So, here we are, and we're making it work. But it has to have quality measures and cost measures in it, and those two things together will drive the value-based outcome.
EBN: Lastly, the report showed a long laundry list of reasons employers cited as challenges to implementing value-based design - lack of C-suite support, difficulty integrating data, low employee engagement, etc. How can benefits professionals knock down some of those barriers so VBD can take a bigger foothold?
Nayer: Benefit designers and consultants/advisers have a lot of resources at hand, including national, state and local data published by CDC for reliable benchmarks.
Secondly, advisers can compare organizations within their book of business. Within any benefit adviser's customer list, they're going to use the same thinking - even if the result isn't the same - for most of their clients. Therefore, using the results they're getting across their book of business should be a reliable benchmark.
Lastly, I would say to benefits professionals, "Don't be daunted." I understand we're going to be in for some rocky times with health care reform. But at the end of the day, our workers are going to show up every day and that's what we have to keep our focus on.
There will be emerging health issues and productivity issues that can be dealt with while we wait to see how health care reform will change things. We don't have to wait to act; we can act now.
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